Investors may soon have a new batch of AI stocks to choose from.
Investors may soon have a new batch of AI stocks to choose from.
Investors have been on the lookout for artificial intelligence (AI) buying opportunities over the past few years. Why? Because AI has demonstrated its ability to become the next big transformational technology. Thanks to AI, companies may gain tremendously in efficiency and become more innovative -- and this is fantastic news for earnings and stock performance.
All of this has prompted investors to scoop up shares of companies leading this revolution, from AI chip giant Nvidia to, most recently, Nvidia challenger Cerebras Systems (CBRS 2.31%). As a result, companies involved in AI have led the S&P 500 to gains over the past three calendar years -- and propelled the bull market higher.
Now my prediction is that a trend recently launched by Cerebras could supercharge the AI bull market this year.
First, a quick look at what's happened so far in the AI boom. Nvidia may have been the first winner, as the company noticed the potential of AI about a decade ago and shifted the focus of its graphics processing units (GPUs) to suit this technology. Others, such as cloud service providers like Amazon and Alphabet, have also scored a win as customers rush to them to get in on AI products and services.
All of this has resulted in explosive revenue growth at these companies and high demand for their offerings. Their stock prices have taken off, too, as investors recognized their performance and bet on more to come.
You'll notice that many of the biggest AI success stories are also market giants that have been around for decades. For example, Nvidia and Amazon both were founded more than 30 years ago. They had plenty of time to grow their businesses into earnings machines before the AI era arrived -- and today, thanks to AI, they offer investors a new growth driver.
Now, let's consider the trend recently launched by Cerebras. And this is the trend of young, dynamic AI companies launching initial public offerings. Cerebras went public on May 14, and as the biggest IPO so far this year, went on to raise $5.5 billion and to deliver a 68% increase on that first day of trading.
Next up is the SpaceX IPO -- the company's intended valuation of almost $2 trillion would make it the biggest IPO ever, and some press reports say trading may begin June 12. While SpaceX is known for its rocket launches, it also has a big AI business, meaning it may attract investors looking for the next AI winner.
Meanwhile, OpenAI, the creator of ChatGPT, is preparing to file for an IPO in a few days or weeks, according to The Wall Street Journal. And Anthropic, the maker of AI assistant Claude, might launch an IPO as early as October, Bloomberg reported earlier this year. Valuations of each could surpass $800 billion, with OpenAI even reaching $1 trillion, various press reports show.
Averytin News Financial update.